Quality management

Session 1

“Individually, we are one drop.

Together, we are an ocean.

 100% Quality is importan

Every day over 1000 planes land and take off at Mumbai
airport
Even if one plane faced problem in landing or take off it is
99.9% good performance
Is it ne

Our heart beats about 100,000 /day

Missing one beat
Even 99.9999% performance is not enough !
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An order from an American rm to a Japanese rm

We need 1000items and we need with 99.7% Quality

The Japanese rm produced and delivered

By packing 997 good items and 3 bad items separately and delivered
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The Business Imperative

“The rst job we have is to turn out quality merchandise
that consumers will buy and keep on buying.
If we produce it ef ciently and economically, we will earn a
pro t, in which you will share.”
- William Cooper Procter

Quality, productivity, and cost remain imperatives for

modern organizations.
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Importance of Quality

Quality is uniquely positioned to accelerate organisational growth through better

execution and alignmen
Quality provides the voice of the customer critical to developing innovative products
and services
Quality can provide an Organisation with a competitive edg

“No Quality, no sales.

No sales, no pro t.
No Pro t, no jobs.”
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The Ritz-Carlton Hotel Company, L.L.C., is a premier hotel management company that
develops and operates 89 hotels in 29 countries. The company targets primarily industry
executives, meeting planners, and prestigious travelers.
It employs 38,000 people who are highly trained and motivated to provide quality
service.
The Ritz-Carlton Hotel Company is the only hotel company to win two Malcolm
Baldrige awards

Ritz-Carlton translates customer requirements into employee requirements through its

Gold Standards and its strategic planning process.
They have taken what their customers want most and designed the simplest ways to
provide them.
Ritz-Carlton’s data show that its employees’ understanding of the Gold Standards is
directly correlated with guest satisfaction

Employees respond to a customer’s requirements at both the team and individual levels.
They provide highly personal, individual service.
Customer likes and dislikes are captured and entered into a guest history that provide
information on the personal preferences of hundreds of thousands of repeat
Ritz-Carlton guests.
When a customer stays at any of their hotels the information is provided to the
employees serving that customer

If an employee detects a problem, the employee is empowered to do whatever it takes

to make the customer happy immediately, or the employee can call on any other
employee to assist.
Such a system depends on well-trained, perceptive, and motivated employees along
with a well-de ned service delivery system.
With more than a million customer contacts on a busy day, Ritz-Carlton understands
that its customer and quality requirements must be driven by each individual employee
at the lowest level of the organisation

Results indicate that Ritz-Carlton hotels are doing an exceptional job of translating
customer requirements into employee behavior and excellent systems.
Ninety-seven percent of Ritz-Carlton’s customers report having a “memorable
experience” while staying in one of their hotels
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Market capitalisation =

Number of Equity Shares x Market Price of the Equity Shares

Apple became the rst $1 trillion publicly traded company on 2nd August 201
“Apple’s $1 trillion cap is equal to about 5 percent of the total gross domestic product of the
United States in 2018,”

Apple closed Thursday above the $1 trillion mark, nishing the day up 2.92 percent at a share
price of $207.39. The price gave the stock a market value of $1,001,678,000,000 — or
$1.002 trillion rounded up

Apple as of July 20, 2018, the company had 4,829,926,000 shares,

Based on that number, Apple needed a $207.05 price to reach $1 trillion in market value

Price on 8/8/2020 around $ 444.4

On (7/12/2020) price around $ 12

Market capitalisation is $ 2.08
Trillion is 1 lac crores
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Rank Company Country Industry Market Cap ($ bn)

1 Apple USA Technology 851
2 Alphabet USA Technology 719
3 Microsoft USA Technology 703
4 Amazon.com USA Consumer Services 701
5 Tencent China Technology 496
6 Berkshire Hathaway USA Financials 492
7 Alibaba China Consumer Services 470
8 Facebook USA Technology 464
9 JPMorgan Chase USA Financials 375
10 Johnson & Johnson USA Health Care 344
11 ICBC China Financials 336
12 Exxon Mobil USA Oil & Gas 316
13 Bank of America USA Financials 307
14 Samsung Electronics South Korea Consumer Goods 298
15 Royal Dutch Shell United Kingdom Oil & Gas 263
16 Walmart United States Consumer Services 264
17 China Construction Bank China Financials 256
18 Wells Fargo USA Financials 256
19 Nestle Switzerland Consumer Goods 246
Quality And Pro tability Interrelationship

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Goal Of An Organisation

Achieve exponential nancial growth without degrading its stability

It cannot be achieved simply by cutting costs…

Assume that a $100 million organisation currently makes $5 million in pro ts.

To make a pro t of $100 million in four years is viable vision

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The rapid spread of COVID-19 reminds us how our wellbeing is interconnected, and the urry
of heartwarming responses people have exhibited in the face of this crisis reveals our
tremendous willingness and ability to help one another.

These truths will persist when life goes back to normal.

Forward-thinking leaders can run better organisations by creating conditions that allow
customers to be more helpful.
When service provision is a true partnership and customers are pitching in, employees are
more productive, better quality of service outcomes are improved, and experiences are
enhanced for everyone involved
There are three barriers that can prevent us from productively engaging:

1) Not being able to help,

2) Not knowing how to help, and
3) Not believing our help is important.

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Organisations that have succeeded in helping their customers be more helpful
have found ways to overcome all three barriers.

For example, in cinema theatres ,public functions ,dramas we have identi ed a

helpful customer behaviour—silencing phones before the performance
To eliminate interruptions during performances
In airlines we all take part in cleaning the plane before landing.
Like we pass our trash and unused items to a crew member in the aisle.
This helps in improving turnaround, because passengers can help the cleaning
crew achieve an on-time departure for the next ight.

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 But if the rationale for customers to help seems mostly about enhancing
pro tability, the request to lend a hand can feel disingenuous, and in some cases,
can lead to behaviours that run counter to the organisation’s objectives. But
when it’s clear that our engagement is broadly helpful—to ourselves and to
others—most people are delighted to engage.

By identifying concrete ways in which customers can be helpful, providing clear

instructions about what they can do, and designing transparency into why their
partnership will make a positive difference for everyone involved, business
leaders can improve interactions among their customers and employees, and
help us all achieve better things together
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 System

Set of elements which are

inter connected , inter related , interdependent with a common goal

 ORGANISATION IS A SYSTE

Marketin
Human resource
Financ
Operations

Convert resources to
goods& services
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 Viewing Operations as a
Transformation Process

Transformation
Process
Manufacturing operations
Inputs
✓ Material
Outputs
✓ Peopl
✓ Tangible goods
✓ Machines
✓ Fulfilled
✓ Intangible
request
need Service operations
✓ Informatio
✓ Informatio
✓ Satisfied
✓ Land
Customers
✓ MONEY
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 Marketing
Advertising and sales promotion
Pricing function
Physical Distribution
 Own the Brand
Sales
Customer Relationship Management
Gathering Competitive Intelligence
After sales service
Market research -- Innovat
Maximise customer satisfaction , service level
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 Finance

Pro t Maximisation/Wealth Maximisatio

Capital structure decision (sources of funds
Budget preparatio
Allocation of Funds /Application of funds (Investment Decision)
Working capital managemen
Tax Administratio
Disposal of Pro ts or Surplus(Dividend policy)

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Finance

Prefers
Low stocks every wher
Prefers Few plants to give economics of scale and to minimise
overall cost
Large batch size
Make to order operation

Minimise cost ,inventory

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 Human Resource Management

Recruitment And Selectio

Training programmes
Manpower Planning
Incentives
Retirement , Dismissal and Retrenchme
Trade union interaction

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 Operations management

Design
ADDING VALUE to resources
Logistic
Supply chain management

The operations manager’s objective is to build a Total Quality Management

system that identi es and satis es customer needs.

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 Marketing want
High stocks
Wide range of stocks
Location near customers
Production to vary to take care of uctuating customer demands
Ef cient distributio
Operations Wan
High stock of raw materials
Narrow range of nished goods
to help in long production runs
Location near raw materials
Stable production for ef ciency
Emphasis on ef cient movement of materials through operations
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 Competitive Advantage
Is driven by customer wants and need
Makes signi cant contribution to business succes
Matches organization’s unique resources with
opportunitie
Is durable and lastin
Provides basis for further improvemen
Provides direction and motivation

Quality supports each of these characteristics

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QUALITY MANAGEMEN
UNIT
Introduction: Concept of Quality – Dimensions of Quality - Philosophies of
Deming, Juran and Crosby – Evolution of Total Quality – Frameworks for Quality
– Baldridge Award, Deming Award, European Award, ISO 9000 – Comparison of
Various Frameworks
Issues of Quality:  Quality Cost - Customer Supplier relationships – Designing
Organisations for Quality – Process Design – Process Improvement – Process
Control – Process Managemen
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QUALITY MANAGEMEN

UNIT I
Tools and Techniques:Design Tools – Quality Planning Tools – Continuous
Improvement Tools -  5S and Kaizen– Lean Concept
Six Sigma: Concepts – Steps and Tools – De ne, Measure, Analyse, Improve and
Control (DMAIC) Methodology of Six Sigma Implementation – De ne, Measure,
Analyse, Design and Verify (DMADV) Methodology for High Performance Designs
– TQM vs. Six Sigma – Lean Six Sigma – Assessing Readiness for Six Sigma
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3.4defects/ million opportunitie

34defects/ 10 million opportunities

QUALITY MANAGEMEN
UNIT II

Total Quality Management – Principles and Practices ; Customer Satisfaction – Total

Employee Involvement – Total Production Maintenance – Total Quality Control – Zero
Defect - Quality Assurance – Quality Circle – Quality Audit.Statistical process control:
Quality control measurements – capability and control – SPC methodology – control
charts for variables data  - control charts for attributes – summary of control chart
construction – designing control charts
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QUALITY MANAGEMEN
UNIT I

Quality Function Deployment – Failure Mode and Effect Analysis – Taguchi Loss
Function Approach and Robust Design Reliability: De nition and Concepts – Product
Life Characteristic Curve – Bath Tub Curve – Reliability Function – Reliability
Engineering
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QUALITY MANAGEMEN
UNIT

Quality Standards:  ISO 9000:2000 – Concepts – Certi cation Requirements –  ISO

9000 in Indian Business Environment - ISO 14000: Concepts and Importance – Six
Sigma Certi cation – Service Quality Measuremen
HR Issues in Quality: Teamwork – Leadership – Quality Culture – Organisational
Change – Sustaining Chang
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If managing quality is the answe
What is the question ?
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De ning Quality
Perfection Fast delivery

Providing a good, usable product Consistency

Eliminating waste
Doing it right the first time
Delighting or pleasing customers

Total customer service and satisfaction

Compliance with policies and procedures

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One way to ensure a quality product is to build quality into the process.
Consider Steinway & Sons, the maker of premier pianos used in concert halls all
over the world.
Steinway has been making pianos since the 1880s. Since that time, the company’s
manufacturing process has not changed signi cantly.
It takes the company nine months to a year to produce a piano by fashioning
some 12,000 hand-crafted parts, carefully measuring and monitoring every part
of the process.

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Although many of Steinway’s competitors have moved to mass production,

where pianos can be assembled in 20 days, Steinway has maintained a strategy of
quality de ned by skill and craftsmanship.
Steinway’s production process is focused on meticulous process precision and
extremely high product consistency.

This has contributed to making its name synonymous with top quality.
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Quality problems in our food supply are often in the news. Rather than
becoming less frequent, recent trends suggest that food safety problems are
occurring even more often.
In fact, some of the largest food recalls in recent histor

Menu Foods Pet Food—In 2007 Menu Foods Inc. recalled several brands of
dog and cat food. Wheat gluten, an ingredient provided by a Chinese company,
contained melamine, an industrial chemical used in the making of plastics.
In the end, two Chinese companies and their owners were indicted in U.S.
federal court over the incident, as well as a U.S.-based wholesaler

Hallmark/Westland Meat Packing—In February 2008, the culmination of an

investigation into slaughter practices resulted in the recall of 143 million
pounds of beef, much of it destined for school lunch programs

Formal De nitions Of Quality

Transcendent Perspective: Excellenc

Product Perspective: Quantities of product attribute
User Perspective: Fitness for intended us
Value Perspective: Quality vs. Pric
Manufacturing Perspective: Conformance to speci cation
Customer Perspective: Meeting or Exceeding customer expectations
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Product Quality.
Product quality is often judged on Nine dimensions of quality

Performance—main characteristics of the produc

Aesthetics—appearance,feel, smell, tast
Special features—extra characteristic
Conformance —how well a product corresponds to design speci cation
Reliability —dependable performanc
Durability —ability to perform over tim
Perceived quality —indirect evaluation of quality ( e. g ., reputation
Serviceability —handling of complaints or repair
Consistency — quality doesn’t vary, consistency in output

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Dimensions Examples
Performance Everything works: t and nish, ride, handling, acceleration

Aesthetics Exterior and interior design

Convenience: placement of gauges High tech: GPS system Safety: anti-

Features
skid, airbags

Conformance Car matches manufacturer’s speci cations

Reliability Infrequent need for repairs
Durability Useful life in miles, resistance to rust
Perceived quality Top-rated, Braand name
Serviceability Ease of repair
Consistency Quality doesn’t vary from car to car
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Goods
Servic
A product is tangible
A service is intangible
Ownership is transferred at the
Ownership generally is not
time of purchase
transferred
A product can be demonstrated
No resale is possible
before purchase
A service does not exist before
A product can be stored in
purchase
inventory
A service cannot be stored
Production precedes consumption
Production and consumption are
A product can be transporte
simultaneous
The seller produces the product
A service cannot be transporte
A product can be resold
The buyer can perform part of the
production
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 Service Quality

Consistently meeting or exceeding customer expectations and

service-delivery system
performance criteria Dimension

Reliabilit Communication
Responsivenes Credibility
Competenc
Acces Security
Courtesy Undrstanding/knowing customer
Tangibles
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Though travelers increasingly rely on carry-on luggage when they travel, larger
suitcases still need to be checked in for the ight.
Luggage handling is a major operation at a big airport with many opportunities
for defects.
Depending on the airport and the airline, between 0.1 percent and 1 percent of
the luggage gets mishandled.
As travellers, we always wonder about the likelihood that the bag will make it to
the same destination airport as we do. The most common reasons for lost
luggage are

• The routing label gets damaged

• The passenger forgets to pick up the luggage
• The agent types in the wrong destination code
• The luggage is picked incorrectly and is put on a wrong ight

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A particularly noteworthy example of luggage-handling defect happened in 2008 when

country musician Dave Caroll traveled from Halifax to Omaha.
He checked in his concert guitar in Halifax.
Upon arriving in Omaha, he noticed that his rather expensive Taylor concert guitar was
severely damaged.
Caroll requested that the damaged guitar be paid for by United Airlines.
The airline, however, was not willing to pay for the damage.
After long and unsuccessful negotiation with the airline, Caroll gave up on the idea of
receiving compensation.

Instead, Caroll created a song,“United Breaks Guitars,” that he subsequently posted on

YouTube.
The video clip with the song (and a rather amusing band posing as United Airlines
employees) attracted over 10 million viewer

https://youtube/P45E0uGVyeg